5.3 Lean production and quality management (HL only)

By the end of this chapter, you should be able to: • outline the following features of lean production:

• less waste

• greater efficiency

• distinguish between the following methods of lean production:

• continuous improvement (kaizen)

• just-in-time [JIT)

• kanban

• andon

• explain the features of cradle-to-cradle design and manufacturing

• outline the features of quality control and quality assurance

• explain the following methods of managing quality :

• quality circle

• benchmarking

• total quality management (TOM)

• examine the impact of lean production and TOM on an organization

• explain the importance of national and international quality st andards.

What is "lean production?" "Lean prod uctio n " (also called "lean manufactu ring" o r j ust "lean") is an a pproach to opera tio ns manageme nt tha t focuses on cu lling a ll types o r waste in the production process (such as waste o f time) w ith o ne a im : grea te r efficiency. Lean productio n is o r Japanese o rigin (it was first develo ped by the au tomobile manufacture r Toyota) and became popula r in other countries in th e 1990s. Literally, the wo rd " lea n" refe rs Lo the fa ct that, as w it h a hea lth y p iece o f lean meal witho u t much fa t (if you a re a meat ea te r) , the production process ge ts rid of a ll Lhe c le m en ts that do not directly add va lue . Th is is not a new idea: Taylo r ist manufacturing in the early 20th century was a lready based o n the idea of culli ng waste, wi th assembly lines and factory workers specia lized in o ne task (see Unit 2.4). It was o nl y in the la te 20th cemury tha t manageme111 resea rche rs s ta rted w rit ing books concc pLUa lizing lea n production an d st udying how th is approach m igh t be appl ied in othe r compan ies, in o the r industr ies, a nd in o the r sectors. The p rinciples of lean productio n have now spread all arou nd th e world, especia lly in the au to mo bi le ind ustry; but they ca n a lso be adopted a nd applied to other industries, too, from logist ics to dis tribu tio n a nd from constructio n to re ta il. Even some government agencies and services su ch as education a nd hea lth care now use the princip les of lean productio n .

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OPERATIONS MANAGEMENT

The starting point for lean production consists in identifying the values desired by the customer (for example long battery life, possibi lty for customization, or easy after-sales service connection), then all the stages of the production process that do not add va lue are e liminated . This eli mination of waste is a key goal of lean manufactu ring - the word "waste" must be interpreted in a broad sense, which can include waste of:

• Lime (for example waiting for the next stage of production, o r wa iting for som e elemems to arrive from a different location)

• tran sportation (for example the movement of half-constructed ca rs in a factory may not add anything to the production process itself)

• products (for example defects that need to be reworked o r scrapped )

• space (for example when Loo much stock is being produced and stored; this is ca lled "overproduction")

• inventory (for exa mple with a much too high quantity of raw materials being purchased and stored, before they a re used)

• e nergy (for example by unde r-utilization of some mach ines, which at fu ll capacity would not proportiona lly requ ire more power)

• talents (for exam ple not optimally using workers' ski lls and knowledge).

In the context of lean production, the meaning of "waste" is very broad: it is not just about the disposa l o f substances o r objects such as scrap meta l or papers, bu t about all other aspects of the production process.

Cutting waste is directly linked to greater e fficiency: w ith less waste, the organizati on 's resources (such as physical resources, h uman resources, and financial resources) w ill be better used, employed, and deployed:

• Physical resources can be used more efficiently, especia ll y without space for storage (which is doubly expensive, because of both the unused stock and the storage space itself, su ch as rent, lighti ng, and heating of a warehouse).

• Human resources can be deployed more efficiently, for exa mple reducing unproductive travel times between venues (which is also expen sive and not environmemally friend ly).

• Financia l resources can be used more efficiently, Loo as, for example, holding stock ties up working ca pital (which means that this money cannot be used elsewhere in the organization).

Student workpoint 5.7

Be a thinker Can you link lea n production to seve ral lessons from other pans o f the course?

1. The starting point of lean production consists in ide ntifying the val ues desired by the customer. How can this refer to a marketing orientation that you have studied (Unit 4 .1 )?

2. What are the best m ethods of market research to ide ntify the values desired by the customer (Unit 4.4.)?

3. How can a fishbon e d iagram (Unit 1.6) help identify areas of waste in a production process?

4. Lean production a im s at g rea ter effi ciency; how can th is appear in ratios that you have studied, such as the acid test (Unit 3.5) and stock turnover ratio (Unit 3.6)?

5.3 LEAN PROD UCTION AND QUALITY MANAG EMENT (H L ONLY)

Methods of lean production Over the years, several methods of lean production have been defined and implemented. If the m anagers of an organizatio n decide to adopt lean prod uction , they w ill choose the met hod that suits best their comext. The fo llowing four methods are particularly important:

• cominuous im provement (kaizen)

• just-in-time (JIT)

• kanban

• andon.

Continuous improvement (kaizen) The word "kaizen" (which mea ns "con tinuous improvement") is a

Japanese term commonly used, as this method originates from Japan: like lean production as a wh ole, the idea of kaizen was developed by Toyota . The emphasis is on contin uous change, as opposed to just occasional changes. In its simplest form, this process may involve suggestio n boxes or competitions to And sui table a reas for improvements, as o ften the workers them selves may have very good ideas, based on wh at they observe o r experience directly on the shop floo r. Kaizen, h owever, can be more sophisti cated, requiring certain key princip les:

• ll must be inclusive of all levels of the hiera rchy (i.e. the wh o le o rga nization must adopt that managemem philosoph y, not just a grou p of managers o r one departmen t only) .

• There shou ld be no blame attached to any problem or issues raised (otherwise som e employees may hesitate to make suggest io ns).

• Systemic th inking is needed in o rder to consider the w ho le p rod uction process, and no t just so me parts of it.

• Kaizen focuses on the process, and not on t he end product.

The mai n d ifficulty with kaizen is the fact tha t it is difficu lt to ma in ta in the necessa ry m o mentum over a long period o f tim e. To do so wou ld require high levels of commitmem a nd a sense o f loyalty by the employees. The culture of the organization may influence this, a nd so w ill the leadership style: kaizen is unl ike ly to work under an autocra tic leadersh ip o r bureaucratic corporate cu lture.

Just-in-time [JIT) A busi ness may hold stock (inventory) for many reasons, for example to e nsu re that it can reply to any sudden, unexpected demand (this ca lled "buffer stock"), or to take advan tage of bulk purchasing of raw mate ria ls. Hold ing stock, however, may incur severa l costs: not on ly storage costs, but a lso insu rance costs and even the pa yro ll costs of staff who look after the stocks. Comrollin g stock levels is very important for a business: this function is called stock control. Stock control is based on a balance between:

• J IC, which means "just-in -case": holding reserves of both raw materials and Anished products in case of a sudden increase in demand (or of a problem in production o r in the supply chain)

CHANGE As we learnt in the section 5.2, changing production methods can

be costly and time-consuming. However, that has not deterred many businesses from making the change

towards leaner production. Read about the car manufacturer Jaguar [httpJ/businesscasestudies.co.uk/

jaguar/lean-production/introduction. html#axzz2xeHS9wx2]

In what ways has the company

benefitted from making the change to lean production?

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OPERATIONS MANAGEMENT

• JIT: avo idin g stock by being able to get supplies only when necessary, and to produce only when ordered.

The diffe rence between JIT and JI C and the facto rs affecting s tock control and optima l stock levels will be furt he r explo red in unit 5.5.

JI C is the traditio nal method of stock control; however, in terms o f lean production, JIT means that the company will not hold buffer stock, w hich contributes LO the two pillars o f less waste (the re is no waste of space in storage faci lities) and greater e fficiency (not having money tied up in stock).

Kanban "Kanban" is a nother Japanese word, as the idea also o riginates from the Japanese com pany Toyota. Kanban refers 10 o n e of the systems that supports J IT. Imagine a la rge table with colo ured s tickers and s ticky notes that ma y be moved arou nd, from one place to the other. At a very basic level, th is is what kanba11 is abo ut. A kanban ca rd is a m essage, te lling the factory worke rs what to do next, fo r example move to the next s tage of p rod uctio n o r reorder so me stock. In te rms of opera tions man agement, consider now how such colou red labels cou ld be fi xed on groups of items, bo xes, or shipments: the aim is LO e nsu re a regular and stead y flow, w ithout any waste of time o r resources. The rate o f de mand is used to con trol the rate o f prod uctio n. Kanban is not a tool of stock control, but a tool to facilita te lea n production .

Modern kanban cards are a ll compute rized, with electronic code bars that are d irectly read and interpreted. This is a good example o f an innovalion used directly in a factory, to help the production process o f other products (which may a lso be innovative in their own righ t). Al though kanban o riginates from the automotive industry and works best in simila r manu facturing con texts, the basic principle can be transferred to other a reas - for example emails sent to sa lespeople Lo te ll them that products a rc ava ilable are a form o f kanban; th e expression "ekanban" is increasingly used, too.

Product Line 1 KAN BAN (") ~-------------;:__;;;;----_______ __;_ ___ .:....:..;:=-=-:-~ 0

Supply source / Quelle Demand source / Senke ~

manufactus

~P~W~H~•~M~S_T~K _ _,_•~- V~E=RZ-=---------1~ o Material Material description / M aterialkurztext ';:; cs:> 0906928 Bosch Polkern 1 263 104 811 ~ ~ ~~=======~s~iz-e~/~Me~n~g~e--------------'-~B-as=e~u~n~~,~M~e-ng- e~n~ei~nh~e~~--4 ~ <0

A kanban card

Andon

~3_2_0_'0_0_0 ___ _ S_T~-----~~ ~ Shipping un~ / Trensporteinhe~

1 X

14 X

·' II I II IIII I I I I Ill I I l~lll 1~111111111111111111111

Printed / Oedruckt: 02.0812008 Kenben ID: 0906928C110022

;,,:- I

~- 0 = ~ = 3 3 Cl) -,

Another Japa nese te rm, andon, refers to a signa l (usua lly visua l and e lectric or e lectro nic) w hich informs workers (supervisors, ma inte na nce sta ff, even ma nagers) of a p roblem (typica ll y a qual ity prob lem o r some

5.3 LEAN PRODUCTION AND QUALITY MANAGEMENT (HL ONLY)

delay in a process at a workstation). Li ke kaizen and kanban, the a11do11 system was developed in Toyota factories .

When a problem occurs (for example a product defect or a n a nomaly with the machinery), the worker triggers t he alert system - and a tea m o f co-workers come and help immediately. This means that the problem wi ll be resolved as quick ly as possible, agai n in the spi rit of lean production: less waste of tim e when dea ling w it h a problem . Th e problem will then be logged in a database - should it occu r aga in (a t th e same workstation or another o ne) the workers wi ll promptly re trieve information abou t the causes and the solution.

Andon has other advantages:

• Workers o n a production chain are immediately notified (workers a t all levels of the chain of command, includ ing engineers).

• Supe rvisors do not need 10 spend time monitoring production: their time is instead spent problem solving.

• Feedback can be provided to a ll teams (even the ones that did not get invo lved in that specific inciden t).

• The whole organ iza ti on learns from its problems and mista kes, which enables kaizen (contin uous improvement).

Originally, andon alerts were simple (such a red signal meaning "problem here"); however, modern systems can include other forms of displays, such as text or symbols, with a udio ala rms 100.

An andon signal

Cradle-to-cradle design and manufacturing Crad le-to-cradle d esign and manufacturing refers to a recent approach to design a nd manufacturing based on principles of sustainable development, especially recycling.

The term "cradle" refers to the production phase, i.e. the creation o f a product such as a book or a car. The term "cradle to cradle" comes from the expression "cradle to grave" : it suggests that products, once they have been used, shou ld be entirely recycled 10 create the same new products again. At the moment, this is only the case for a small number of products from a small number of companies, for example some clothes or office furniture - but the current socio-cu ltura l momentum

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OPERATIONS MANAGEMENT

towards environmental susta inability will pu t pressure on companies to design and manufacture more and more products tha t a re pa rtly, if not entirely, recycled.

To receive the official "cradle to cradle (C2C) certification", products need to fulfil several crite ria, for exampl e regarding:

• the reutiliza ti on of the material itself (recycling, strictly speaking)

• the amount of energy necessary for the recycling process, ideally renewable energy

• the amount of water needed as part of the recycling process

• the corporate social responsibil ity (CSR) of the company, for instance about fa ir labour practices.

The topic of cradle-to-cradle design an d manufacturing is still in its infancy: the independent n on-profit organization called The Cradle to

Cradle Products Innovation Institure was launched in 20 12. This means that the criteria and features will become more defi ned and refined over time. As part of their research and development, many companies a re exploring what it could mean in practice. For example, Ford has proposed a concept car called "Ford Model U", a car for th e 2 1st century based on recycling and eco-friendliness, using sunflower-seed en gin e oil and soy­based seat foam - however, the Ford U only exists as a prototype and as a theoretical example of what cradle to cradle could do.

Student workpoint 5.8 •·~ ---------------'"•,lli1

Be a thinker How ca n you link cradle-to-cradle design and manufacturing to other parts of the co urse? Conside r:

• Unit 5.1 about the three types of susta inability

• Unit 1.3 about CSR

• Unit 1.4 about STEEPLE analysis.

Quality control and quality assurance A key component of operations m anagement is the issue of quality. In the past this was very much a matter of quality control but, thanks to the quality revolut ion that has sprung from Japan since 1945, there has been a move towards quaJity assuran ce. This change in quality management came about largely due to the work of one man: the US management theorist W. Edwards Deming, w hose ideas about how to produce quality products are still influential today.

Quality is importan t for a producer as it can lead to:

• increased sales

• repeat customers (brand loya lty)

• reduced costs

• premium pricing. W. Edwards Deming

5 . 3 LEAN PRODUCTION AND QUALITY MANAGEMENT (HL ONLY)

From a marketin g vie wpoinL, a p roduct n eed n ot be a high-qual ity product to bring al l o f th ese rewards, but as lo ng as th e consum er pe rception is one o f qua lity, Lhen that ca n o fLe n be e no ugh . So leag ue tables sho wing "to p" busin ess schools, airlines, o r MP3 players can be hugely importa nt fo r businesses, even if Lhe product voled "the best" is not actually so!

The term quality suggests thaL a p roduct is:

• reliable - it is no t going to b reak down

• safe - it is no t going to fail

• durabl e - it is going to las t

• innova tive - it is lead ing th e way in te rm s of functio nality o r design

• value fo r m o ney - you get w ha L yo u pay for.

The quality revolutio n showed tha t even businesses no t at the top end of the ran ge could benefi t fro m producing good-q ua lity p roducts. While a Honda ca r m ay no t have the sa m e bra nd image as a BMW, there is s till a huge amo unt to be ga ined by prod ucing good-quality, cheaper cars. This is a fact tha t GM and Ford a re o nl y just starting to rea lize, a nd Rover and British Leyla nd never did work o ut.

• iriver

high price

• archos

• beosound •

apple

• rio

low ------ f------ high quality • quality

• creative [muvo] • sharp

oregon • ministry of sound

• mpman

low price

Figure 5.3.4. A way of mapping products based on sca les of quality and price

Student workpoint 5.9

Be an inquirer

-------~~--------• . •• - -~-------'-'-'•)j

An IB class d id som e resea rch to find th e best-qua lity MP3 player. They initia ll y d id a survey o f a ll the students, the n used Lhe website o f a professiona l m agazine for an ex te rna l, re liable j udgm en t. They the n created a p rod ucL positio ning ma p, w ith the two axes of p r ice a nd quality. They concl uded LhaL q ua liLy is no t always re fl ected in the price.

Why n o t try th e sa m e exercise fo r a p rodu ct o f your choice?

The m o ve from "qua li ty comro l" to "qu a lity assurance" ca n be summa rized a s in Table 5.3. I , w hich shows the major diffe ren ce be tween the two syste m s.

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OPERATIONS MANAGEMENT

Table 5.3.1. Quality control versus quality assurance

Ouality control Ouality assurance

Concept • Quality is "controlled" by one person (the • Quality is "assured" because no one person is in

manager] by inspection after the production overall control of quality; the whole business is

run has been completed focused on ensuring quality production

Costs • A certain % reject rate is set, for example 2% of • Zero rejects are expected - every product is

products are allowed to fa il expected to pass inspection

• Wasteful production • Lean production

Processes • It is rare to halt production as it is costly to do so • The company expects to halt production to fix

• Associated with assembly line, flow errors

production • Associated with cellular or modular production

• Quality stops with the job; the focus is only • Quality includes suppliers and after-sales

on the job at hand servicing

People • Quality is the responsibility of one person - a • Quality is the responsibility of the team -

quality inspector quality circles

• "Role cu lture" • Total quality culture

• Autocratic leadership • Democratic consultative leadership

• Top-down, one-way communication • 360-degree communication

In o rder for qua l i ty assurance to work e ffecti vely, the w ho le business has to embrace a total qua lity cu l tura l shift; as with a kaizen approach, this

is d i fficu l t and costly to ach ieve in the short term, but it may well prove beneficia l to the business in the long run. Severa l methods are possible to manage quality; the fo llowing three are particu larly important:

• qua l i ty circle

• benchma rk ing

• total quality management (TQM) .

Quality circles A quality circle can be defined as a formal group o f volunteers (employees from different departments and from all levels o f hierarchy) who meet regularly to discuss and suggest ways of improving quality. The meetings arc facilitated by a team leader (who needs to be tra ined in leadership and group facilitation). Th is is comparable to a focus group for market research , although a focus group wou ld not necessarily m eet severa l times, whereas a quality circle, to be successful , needs

continuity. Quality circles may operate in di fferent ways: they could choose any topic they want to discuss, or they may be working on specifi c issues. The underlying principle is the idea that, coming from a range of perspectives on the company, the members of the quality circle will be able to improve the overall quality of the compa ny; for example, when discussing an issue of staff turnover, the members of the quality circle may present different views, thereby enabling th e company, as a learn ing organiza t ion, to understand the problem (such as staff turnover) and to come up w ith solutions (such as reducing sa fety

5.3 LEAN PRODUCTION AND OUALITY MANAGEMENT (HL ONLY)

hazards and giving workers more flex ibi lit y). Th is is n o t th e same as managers doing a consultation exercise: the focus h e re is on generating solutions tha t a re about quality.

As a tool of quality enhancement, quality circles we re first established in Japan in 1962. This il lus trates again how the qua lity revolution came from Japan a fte r the Second World War. Quali ty circl es are now very common in some cou ntries (such as Japan and China), though less so in Anglo -Saxon cou ntries and Weste rn Europe, where the method did not spread and did not prove that successful.

Student workpoint 5.10

Be a thinker 1. What skills may faci li tators of quality circles need? Wha t could

their tra ini ng requ ire?

2. Quality circles are very common in some regio ns of th e world

(such as South East Asia) bu t not o thers (such as Europe). Why could that be?

Benchmarking Benchmarking is about com pa rin g yourself LO your competitors. Benchmarking is a tool that many businesses use. As a poim of reference, some benchmarks are established - and the businesses ca n the n compare their practices and standards w ith those o f their competitors. A well-known example o f benchmarking is the number o f stars used to classify hotels: a nve-star hotel is of a d iffe re n t quality s tanda rd from a three-star hote l. This is useful fo r consumers, who know what they can expect - bu t it is also very useful l'or business managers, as the bench ma rks he lp them identify how th ey could improve th e quality of their products and serv ices, should they w ish to do.

Businesses take the best players or the marke t leader in their industry and follow those orga nizat io ns' "best practices" . It is not so much about copyi ng the riva ls' prod u cts as understanding their practices and processes in order 10 improve quality. Benchmarking can be done in several ways. Some companies may use the benchmarks already existing in their industry (suc h as hotel standards); a compa n y may ha ve a spccinc quali ty issue (for example about commu n icating on quality and innova tion ) and may then sLUdy another company that they identify as the model they want to follow and e mula te . Benchmarking can a lso be done in a collaborative way, with competing businesses acting together to keep up ro da te.

In al l cases, the success of benchmarking relies on the busi n ess's readiness Lo "think outside the box", t ryin g to in troduce something new and not Lo carry o n as it a lways has. Besides, what works fo r one organiza tion may not n ecessa rily work fo r anothe r, so benchmarking, Loo, h as its limits.

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OPERATIONS MANAGEMENT

Total quality management (TOM) As indicated by its nam e, TQM is an approach to quality enhan ce m ent

tha t permeates the whole organization.

TQM can include quality circles and ben ch m arking, as well as kaizen, kanban, and andon. All 1hese quality tools are not mutua lly exclusive;

they may be combined and integra ted in a w ider framework of TQM .

Som e o ther possible features of TQM are ou t l in ed in Table 5.3 .2 .

Table 5.3.2. Other features ofT0M

Feature Purpose

Quality chain As the quality of a business depends on the quality of its

suppliers and after-sales service, all stages of the production

process must have concern for quality. A possible way to consider this is by imagining that the next part of the chain

is the final customer.

Statistical process All stages of production are monitored and information

control [SPC] is given to all parties, usually in the form of easy-to-

understand diagrams, charts, and messages.

Mobi lized All employees [ at all levels of seniority and in all departments,

workforce even the ones not directly in contact with products or

customers] are expected to embrace TOM. Everyone is encouraged to feel pride in their work, given responsibi lities

and recognition, for example through employee of the month schemes - so everyone is included in the quality decision-

making process.

Market-oriented By focusing on what the customer wants, the business can

production make sure that it is innovating and continually reinventing its

products. This can lead to improved sales and brand loyalty.

Student workpoint 5.11

Be knowledgeable Read the text below and answer th e qu estion s th at follow.

Mattel in China

•

M attel has reca l led m ore th an 18 m illion toys w orldwide, th e second

such r ecall in two weeks.

••

Chinese-made Sa rge die-cast toys from the Pixar film Cars h ave been recalled beca use their paint contains lead. M attel has also reca lled toys

containing small m agn ets that can com e loose, includ ing Po lly Pocket,

Batman M agna, D oggie Dayca re and O ne Piece playsets. Previously

th e compan y had recal led Dora The Explo rer dolls' houses.

The Consumer Products Safety Com m ission (CPSC) said i t had no

reports of an y injur ies from the recalled products.

1. Outline the possible costs to Mattel o f recalling its toys. (2 marks)

2. Explain w hat may be the costs of no t reca lling the toys. (4 marks)

3. To w ha t extent would a system o f TQM h elp Mattel overcom e

th is type of problem in future? (8 m arks)

Key terms

Lean production

a Japanese approach to

operations management focusing on less waste and

greater efficiency

Kaizen

a method of lean production

based on continuous

improvement

JIT

"just-in-time": a method of

stock control which means

avoiding holding stock by

being able to get supplies

only when necessary and to

produce just when ordered

JIC

"just-in-case": holding reserve

of both raw materials and

finished products in case of a

sudden increase in demand

[or of a problem in production

or in the supply chain)

Kanban

a system of messages

[written or electronic) to help manage production flows and

JIT delivery

Andon

a system of signals and

alerts informing workers

of a problem that requires

immediate attention

Cradle-to-cradle design and manufacturing

a recent approach to design and manufacturing based

on principles of sustainable

development, especially

recycling

5.3 LEAN PRODUCTION AND OUALITY MANAGEMENT (HL ONLY)

Lean production and TQM are closely linked. Lean production focuses on less waste and greater e fficiency, TQM focuses on quality assurance and qua lity enhancement. For a company, implementing lean production and TQM has many advantages:

• It can create closer working relationships with a ll stakeholders (including suppliers and customers).

• It can motivate the workers.

• It can reduce costs (especially long-term costs).

• It can improve the design and production of qua lity products.

• It can enhance the reputa tion of the company.

However, implementing lean prod uction and TQM has some disadvantages too :

• It is costly (especially in the short term).

• Staff may need significant training.

• It may take time to ch ange a corporate culture.

• rt can create a lot of stress o n formal re la tionsh ips in the business.

• It is difficult to maintain over a long period of t ime.

TQM and lean production are more com monly used by businesses that are new or looking to make sign ificant changes to re tain their competitive advantage. However, many long-established businesses now also understand that their trad itio na l approaches to operations (including production and quality control) ma y be too costly, and that they need to make changes to ensure their economic sustainability.

National and international quality standards An excellent way for businesses to assure the consumer of the quality of their products is by gaining certification for recognized qua lity standards. At national or, even be tter, international level, a certificate is a mark of assurance tha t the product has met certai n minimum requirements. International standards are set by organizations such as the IOS (International Organization for Standardization) or the EU (Eu ropean Union). The most common standards p ublished by the IOS are the ISO9000 family, wh ich certifies quality management systems in organizations (for exa mple ISO900 J ).

The problem of nationa l versus international certification is a complex one. For example, in 2007 a Chi nese producer manufacturing toothpaste for an international brand satisfied national regulations but fai led international sa fety standards, as the toothpaste was found to conta in chemicals not accepted by the internationa l sta ndards.

Meeting recognized standards can be very favourable to a business beca use it can:

• enable exports (market development abroad)

• give a competitive edge

• save on the costs of withdrawing products

Key terms

Ouality circle

a formal group of volunteers [employees from different departments and from all levels of hierarchy) who meet regularly to discuss and suggest ways of improving quality in their organization

Benchmarking

a tool for businesses to compare themselves to their competitors in order to identify how they can improve their own operations and practices

TOM

an approach to quality enhancement that permeates the whole organization ( as a wide framework, TOM can include quality circles and benchmarking. as well as kaizen, kanban, and andon]

• Can quality be objectively measured?

• Does the not ion of "good quality" change over time or over place, or is it universal?

• Is a quality product always more expensive to manufacture or buy than a mediocre product?

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OPERATIONS MANAGEMENT

• act as an insu ran ce

• bring be Lte r profit margins.

Revision checklist ✓ Lean produclio n is a n approach LO operations management which

a ims to cut waste and promo te maximum efficiency.

✓ The continuous improvem ent method of lea n prod uction involves con tinuous cha nge, as o pposed to occasional cha nges. This approach must include a ll levels o f hie rarchy and focusses on the process

rather than the end product.

✓ The just-in-tim e method (J lT) reduces the amount of stock held by e nsuring products are mad e only when ordered.

✓ Kanban is a system which suppo rts JIT. It aims to ensure a steady fl ow of production, w ithou t any w aste.

✓ Andon refers to a s igna l w hi ch will inform workers of a problems in the production process. It allows problems LO be identified and resolved as quickly as possible.

✓ Cradle-to-cradle design and manufacturing is the concept the once products are used, they should be entirely recycled to create the same product again.

✓ Quality control and qua lity assurance should ensure that products and se rvices a re reliable, safe, durable, innovative and offer value for

money.

✓ Quality contro l involves inspecting finished products ro check they meet the desired leve l o f quality.

✓ Quality assurance is a system or setling and monitoring quality standards across the whole production process.

✓ A qua li ty circle is usually a group of voluntee rs w ho meet to discuss ways of improving qua lit y.

✓ Benchmarking involves comparing products or services against the products o r services o f competito rs.

✓ Total quality management (TQM ) is a n overarch ing approach to improving quality. Jt ca n include a combination of different quality

tools.